Month: January 2014

Has recent Sub-Saharan African growth translated into improved living conditions for ordinary Africans?

By Andy McKay

High rates of African growth reported in many Sub-Saharan African countries raises concerns about living standards for ordinary African people, with many reporting shortages of food and healthcare. This article assesses changes in living conditions associated with these high levels of growth.

The African growth recovery
The world has woken up to what has been apparent to many of those who live or have been in Sub-Saharan Africa in the past 6-8 years or more: the very impressive recovery of economic growth over recent years. An estimate of the pattern of evolution of aggregate Sub-Saharan African GDP in constant dollar values since 1960 is summarised in Figure 1. This shows the well-known period of significant decline from the mid-1970s to the early to mid-1990s; but now the period of subsequent recovery of growth has almost lasted as long, and has taken Sub-Saharan Africa’s per capita aggregate GDP higher than it has ever been since Independence.

Because of the long timescale the chart may appear to suggest that the recovery since the mid-1990s has been modest. But the whole continent’s per capita GDP grew by more than 30% over the 15 year period since 1995, and this includes some large (and small) countries that have had negative growth over the period. Growth between 1995 and 2005 was still slower than in the first 15 years since 1960. But the rate of growth has been particularly fast since 2005, certainly exceeding that of the early post-independence period, even despite the world financial crisis in 2007-08.

But what is much less well known is how much this African growth has translated into better living conditions for ordinary African people. The comment is frequently made that Africans do not feel the benefits of improved economic performance “in their pocket”. If there is a concern that commodities have played an important role in this growth this may bring less benefit to ordinary people […]

There is an increasing international perception that Africa is standing now at a turning point. It has become one of the world’s top growth areas (5.6% per annum) thanks to the structural reforms being put in place and its demographic dividend for the next 40 years. After being seen as the lost continent for decades, the urbanization of Africa and the emergence of a huge urban consumer market will generate sustainable growth. For the first time, the highest returns are in the sectors delivering goods and services to Africans themselves. Although, Africa is still perceived as a high-risk destination for investors, experience and facts show positive returns and lower risks than those captured by the financial markets. Thus actors investing professionally in the continent see higher returns thanks to the misperception of risk which leads to above-average risk/return ratios. As a consequence, the emergence of the continent reflects in the over performance of all African asset classes for the last decade.

There is an increasing international perception that Africa is standing now at a turning point. It has become one of the world’s top growth areas (5.6% per annum) thanks to the structural reforms being put in place and its demographic dividend for the next 40 years. After being seen as the lost continent for decades, the urbanization of Africa and the emergence of a huge urban consumer market will generate sustainable growth. For the first time, the highest returns are in the sectors delivering goods and services to Africans themselves. Although, Africa is still perceived as a high-risk destination for investors, experience and facts show positive returns and lower risks than those captured by the financial markets. Thus actors investing professionally in the continent see higher returns thanks to the misperception of risk which leads to above-average risk/return ratios. As a consequence, the emergence of the continent reflects in the over performance of all African asset classes for the last decade.

Luxury, a new type of luxury, a new definition? The definition of luxury is changing, from one that alluded to expense and quality, to another that now includes sentimental, cultural, moral and ethical considerations. Africa, its resources, its science, its culture and craftmanship are relevant to this new discourse.

Traditional luxury goods were those high-quality goods that only elites could afford to purchase: Large diamonds, exotic furs, rare perfumes, expensive cars. Very often, the boundary between luxury and simply expensive became blurred: Around the world “old money” often ridiculed the “nouveau riche” for their poor taste. Often this poor taste consisted of purchasing ostentatiously expensive goods rather than real quality. Truly aristocratic families were often discreet with their wealth, quietly cultivating “good taste” and purchasing goods that perhaps were not obviously expensive, but which exhibited extraordinary craftsmanship. In today’s world, the term “bling” refers to flashy, expensive goods rather than authentic quality and craftsmanship.

The past fifty years have seen the traditional luxury brands, such as Luis Vuitton, scale up their production lines using mass production techniques. Thus while they may still be regarded as “luxury,” they are no longer in any sense elite. As hundreds of millions of people now have the wealth with which to purchase a $5,000 handbag, “luxury” brands are also now mass market brands. At the same time, the same mass production techniques that have been used to develop products for “luxury” brands are now used for other mass market brands. Thus, there is no longer a sharp boundary, with respect to quality, between “luxury,” on the one hand, and one of the better mass market brands. The past fifty years have also seen a growing movement towards the moral implications of our purchases. To some extent this movement arouse out of the counter-culture passions of the 1960s.

Born in 1954, a graduate in Law and of the Business School of Strasbourg in France, Olivier Bernheim began his career at Kronenbourg before joining Unilever in Paris, as Marketing Development Manager. Some years after the creation of RAYMOND WEIL and at the request of his father-in-law, Mr. Raymond Weil, Olivier Bernheim joined the watch company in 1982.

It is through his dynamism and visionary entrepreneurial spirit, but also his ability to maintain excellent and longstanding relationships with RAYMOND WEIL partners, that Olivier Bernheim, President and CEO of the Brand, restructured, developed and ensured the brand’s global sustainable growth.